Gold Futures: The Decline may be Over

Author: TradingonthemarkJanuary 19, 2017

It was the first week of August last year when we suggested to readers here that gold had probably reached the end of the rally that had buoyed it since the start of 2016. At the time, we were using a chart of the SPDR Gold Trust (symbol GLD) to identify resistance, but the signs of a reversal were visible on the futures charts too. Soon after our post, futures began a decline that retraced about 75% of the whole rally.

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On the weekly futures chart, gold appears to have completed the downward phase of its current pattern. Although we cannot yet be certain whether the decline was wave (ii) of a five-wave impulse or wave (b) of a three-wave correction, the next stage should involve a fairly strong rally as either wave (iii) or wave (c).

For traders hunting long entries, it might be best to watch for a minor pullback first. Price is already near a Gann square-of-nine resistance level at 1227. If a downward retracement occurs this month or next month, then the area near 1158 appears attractive as potential support.

If price breaks above the nearby resistance, then 1262 represents the next upward target area. We have drawn the forward path on the chart to show futures testing the higher level after a pullback, but it is also possible to think of the level as a target if an upward breakout occurs prior to a pullback.

Note that the dominant 54-week cycle in futures price suggests an intermediate high might occur near the middle of 2017, perhaps around June or July. A pullback prior to that time could offer favorable conditions for long trades.

Visitor - Jeff Nelson:
"At the time, we were using a chart of the SPDR Gold Trust (symbol GLD) to identify resistance..." I've been trying to do my due diligence into the SPDR Gold Trust (GLD). Anyone know why there is a clause in the GLD prospectus that states GLD has no right to audit subcustodial gold holdings? Why would the organizations behind GLD forfeit this right and create such a glaring audit loophole? I have not heard a single good reason for the existence of this loophole thus far. It also doesn't help that GLD claims to be fully backed by physical gold bullion but yet it refuses to give retail investors the right to redeem for any of these ‘claimed’ gold bullion. There are a number of other red flags as well from what I'm reading: "Did anyone try calling the GLD hotline at 866▪320▪4053 in search of numerical details on GLD's insurance? The prospectus vaguely states "The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate which does not cover the full amount of gold held in custody." When I asked about how much of the gold was insured, the representative proceeded to act as if he didn't know and said they were just the "marketing agent" for GLD. What kind of marketing agent would not know such basic information about a product they are marketing? It seems like they are deliberately hiding information from investors." "I remember there was a well documented visit by CNBC's Bob Pisani to GLD's gold vault. This visit was organized by GLD's management to prove the existence of GLD's gold but the gold bar held up by Mr. Pisani had the serial number ZJ6752 which did not appear on the most recent bar list at that time. It was later discovered that this "GLD" bar was actually owned by ETF Securities."

Posted: 1 year ago

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Visitor - Jeff Nelson:
"At the time, we were using a chart of the SPDR Gold Trust (symbol GLD) to identify resistance..." I've been trying to do my due diligence into the SPDR Gold Trust (GLD). Anyone know why there is a clause in the GLD prospectus that states GLD has no right to audit subcustodial gold holdings? Why would the organizations behind GLD forfeit this right and create such a glaring audit loophole? I have not heard a single good reason for the existence of this loophole thus far. It also doesn't help that GLD claims to be fully backed by physical gold bullion but yet it refuses to give retail investors the right to redeem for any of these ‘claimed’ gold bullion. There are a number of other red flags as well from what I'm reading: "Did anyone try calling the GLD hotline at 866▪320▪4053 in search of numerical details on GLD's insurance? The prospectus vaguely states "The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate which does not cover the full amount of gold held in custody." When I asked about how much of the gold was insured, the representative proceeded to act as if he didn't know and said they were just the "marketing agent" for GLD. What kind of marketing agent would not know such basic information about a product they are marketing? It seems like they are deliberately hiding information from investors." "I remember there was a well documented visit by CNBC's Bob Pisani to GLD's gold vault. This visit was organized by GLD's management to prove the existence of GLD's gold but the gold bar held up by Mr. Pisani had the serial number ZJ6752 which did not appear on the most recent bar list at that time. It was later discovered that this "GLD" bar was actually owned by ETF Securities."

Posted: 1 year ago

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Tradingonthemark

Member Since 09.16.2015

Tom Pizzuti and Kurt Hulse helped establish Trading On The Mark in 2008 as a service that helps traders and active investors make use of technical analysys to move in and out of futures markets. TOTM’s technical approach is grounded in Elliott wave and Gann techniques, while also making use of Fibonacci relationships in price and time, historical cycles analysis, proprietary technical indicators, and other more esoteric approaches.